Get More Out of Your Technology Partner with an Allocation Based Project Approach
March 23, 2018
One thing we try to do very early on in the process of on-boarding any new project is set expectations and open communication channels with our clients. It’s important to us to be highly transparent and collaborative so that they have a great experience working with us that sets the foundation for the current project and for future work. One area that we recognize can lead to confusion is an understanding of what to expect as the outcome of an allocation based project vs. a fixed bid project.
Many people are used to, and comfortable with, fixed bid work, but don’t understand the value that agile allocation based projects may bring them. In this post, we take a look at both the pros and cons of an allocation approach and go over some of the pitfalls to avoid if you choose to work in this manner.
What is an allocation based project?
Allocation means you are engaging the availability of resources over a set amount of time, or number of sprints. Essentially, you are buying time to work with us, not just hiring someone to do work while you sit on the sidelines – so it’s a much more collaborative and strategic process on both sides.
When talking about structuring a project this way, it helps to have someone (a project manager or project owner) on the client side who is at least technical, and even better, someone familiar with agile/scrum, but that’s not a requirement. Regardless of how technically savvy you are, we’ll work with you during on-boarding to align expectation and make sure you are comfortable with the process. Ultimately, having a customer who is fully informed and understands how they are engaging us is important and benefits both teams.
Setting expectations around budget and timing:
If you have a flexible scope and budget, allocation allows you to optimize how much you want to spend and how far you want to go, and the result is something more customized to your organization’s needs, all while not paying the premiums you would in fixed scope.
When we are planning an allocation based project we can offer a range of options for you to choose from. We’ll provide a range estimate and you can choose how much you want to spend.
Misconception: Sometimes though, even when clients choose to work with a smaller budget and buy an allocation based project, they may still have an expectation around how much will get done (but you’ll finish everything right?!) This is more likely to happen if they’ve never worked in an agile manner before and are use to fixed bid projects that have a specified deliverable at the end.
Reality: Working in this way gives you much more flexibility over your budget. We also don’t bake any overhead into the sprint costs to guarantee that scope of work will be completed within that timeframe, so you are getting more bang for your buck.
Misconception: Another thing that happens is that we make a recommendation on how many sprints are necessary and the customer makes an assumption that it will all get done in that time.
Reality: With allocation based projects, where scope can be adjusted based on client needs, it may be the case you don’t get everything you’d originally scoped out, but you actually wind up with a more customized solution without paying a premium to guarantee you will have all the things (you think you wanted before a project even kicks off) in that timeframe like you would with fixed bid.
We’ve found that working with clients in a collaborative and agile manner often provides a better, and sometimes different, solution to what was originally requested. But that’s a part of our role, we want to find the best solutions to our client’s problems, and they come to us to not only implement technology, but to help them shape solutions holistically so we can produce more effective outcomes for them. That’s what we love about agile, it allows for this process to happen organically.
*A sprint is a time-boxed effort, it can range from 1 week to 1 month. At GeekHive we prefer 2 week long sprints to achieve maximum productivity and transparency and reduce the possibility for churn and misguided development (from teams not aligning frequently enough). If we estimate a project will take 6 sprints the project time frame will run over 12 weeks.*
Engagement is key in allocation based projects:
Projects that run the most smoothly, and accomplish the most, are those where clients are engaged and motivated to make the best use of their time. We’ve noticed that sometimes unless there is a looming business need or deadlines, it can make them complacent and less motivated to participate. But collaboration is key in agile allocation projects where the time is always running. If clients come prepared we can get a whole lot done, but if they are not ready to make quick decisions, they won’t get the same value, as they would it they were engaged.
Another thing with not being prepared to jump into the project is that allocation does give you the opportunity to pause between sprints and regroup (something you cannot do in a fixed bid project where the schedule and deliverables are decided ahead of time). BUT, we can’t just hold teams waiting for a client to come back to us weeks later, we move them to something else. That means the team may not be available to restart exactly when you want to restart things with exactly the same team members. With fixed scope we hold the team, but you are paying a premium for that guarantee.
Known advantages of allocation vs fixed
A fixed bid is just that, fixed. Meaning you cannot make any changes/additions to the contract without your tech partner coming to you with a change order and asking for more money to broaden the scope. Using an allocation, priorities can shift much easier without an impact to budget. With allocation you can literally re-prioritize on the fly by asking us questions like: “What can be done with the allocation remaining?”
It also sets the project teams up to reduce potential friction and encourages better communication between teams.
In addition, allocation makes space for you to say, I don’t feel like I’m getting the value for my money – in other words, it puts you in the driver’s seat. If you were to come to us and say that, we’d want to sit down and examine the root cause. It can definitely be us, but to reiterate a previous point, it can also be the client if they are not involved or prepared.
Another advantage to allocation is the invoicing structure. For fixed bid projects, a lot of the budget is front loaded at the beginning of the project. Whereas with sprints, in an allocation project, we break the budget up, syncing payments with the value provided during that time period. This makes budgeting easier and more digestible for many of the teams we work with.
Your team structure can also change as needed in an allocation project. For example, mid-way through an engagement, you can evaluate the original estimate of who needed to be involved and make changes based on the changing needs and how things are panning out. There’s a lot of flexibility built into this structure. You may come to us and drop a resource to save money or to add a resource and make a modest change, or sub someone out that wasn’t originally factored in. Any time we think this is a good idea, we consult you to make sure it works for your strategy. You are much more involved in the decision making process than in a typical fixed bid project.
Here are the key benefits we’ve seen for customers with agile allocation:
- Getting the most out of your budget, you will get more value for less money.
- You can make project adjustments prioritizing based on shifting goals and needs, so you get what you want – not what was contracted months ago.
- This type of flexible project structure sets the foundation of our relationship to be collaborative so we can make adjustments based on scope and budget together, instead of based on preconceived requirements.
Pros of allocation based model:
- Encourages collaboration between teams
- Works within your budget – no premiums
- Allows for flexibility of changing needs and a more customized solution
Cons of allocation based model:
- Not a good fit for clients who aren’t ready to roll up their sleeves and be part of the process
- The final outcome may differ from the original expectation
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